The Home You're Buying Or Refinancing

When a lender makes a home loan the value of the property is very important. That’s because the home is used as collateral on the loan. If the borrower meets with misfortune and cannot repay, the loan may be foreclosed and the lender becomes the owner of the property. Lenders then sell the property to recover their losses.

Even more important, you wouldn’t want to buy a property only to find that you couldn’t sell it for the amount you paid! No one wants to overpay for anything - and certainly not the most valuable investment of their lives!

Estimating the value of a home is the job of an appraiser. Here are some things an appraiser may do before submitting a report - an appraisal - giving his or her opinion on the value of a home to a lender:

• Visits the property and evaluates the inside, outside and surroundings
• Checks the location to make sure things like water and utilities are available
• Finds out about local property taxes, building codes and zoning restrictions
• Compares the sales prices of similar homes nearby

Lenders use appraisals when they decide how much money you can borrow. It is part of the underwriting process. They look at an appraisal to see if:

• The estimated value of the home matches the purchase price
• The home's estimated value equals or exceeds the amount being borrowed, if a refinance

A property appraised at a lower value than expected can result in the lender asking for a larger down payment or offering to lend you a lower amount.

Things You Can Do When Buying or Refinancing:

When Buying:

• Before making an offer, ask your real estate agent for sales prices of homes similar to the one you are thinking about buying.
• Several companies, such as LandSafe Appraisal Services, Inc. at landsafe.com, offer online estimates of property values. You type in a street address and receive an estimate based on statistics. This information can also help you decide how much to offer a home seller.

When Refinancing:

• For a reality check on your home’s market value, see the steps suggested under "When Buying."
• Make sure additions and other remodeling meet local building codes.
• Maintain your home inside and out - from the top of the chimney to the furnace in the basement.

Need more help? Call Countrywide for a FREE no-obligation consultation with one of our Home Loan Consultants at 1-800-909-8217. They can help you find the right loan for your needs.